My last post in this series on We Have Never Been Woke by Musa al-Gharbi ended by mentioning another form of symbolic capital very valuable to symbolic capitalists, particularly with the advent of victimhood culture – what al-Gharbi calls totemic capital. As he describes the concept,   In sociological terms, a totem is a sacred symbol that represents a people; it marks an essence they are uniquely bonded to; it connects their past with the present; it links the fates of totem bearers and endows them with distinct social proprieties. If we understand labels like “Black,” “LGBTQ ,” “disabled,” “woman,” and so on as serving a function akin to totems in contemporary victimhood culture, then we can define “totemic capital” as the epistemic and moral authority afforded to an individual on the basis of bearing one or more of these totems—that is, on the basis of claimed or perceived membership in a historically marginalized or disadvantaged group. In order to wield this totemic capital, elites have a strong incentive to lay claim to as many of these totems as they can. But, al-Gharbi says, the lives and circumstance of elites from minority backgrounds are more similar to their fellow elites than to other minorities. Put another way, a member of the elite who is Black is has more in common with an elite who is white by virtue of being a fellow elite, than they have in common with a nonelite who is also Black by virtue of their shared race: In virtue of these background characteristics, these “representatives” typically grew up in communities and homes very different from those of most other African Americans. Their social networks, education levels, and professions are uncharacteristic of most other African Americans. Their material interests and worldviews are often demonstrably out of step with most other African Americans too. Attempts to gain totemic capital also become an escalating status struggle: Far from using their elite position to meaningfully help genuinely disadvantaged members of the groups they claim affiliation with, symbolic capitalists typically attempt to leverage collective identities in the service of their individual benefit. Discussions turn on what I am entitled to on the basis of my identity claims. These claims are, themselves, predicated on pitting women against men, Blacks against whites, LGBTQ Americans against cisgender heterosexuals, wherein one party bears collective guilt, and the other collective entitlements, on the basis of past or ongoing victimization. Even historically marginalized and disadvantaged groups are often competitively set against one another, with exchanges often devolving into a form of “oppression Olympics.” Who had it worse historically—Blacks, homosexuals, or women? Who has it worse today? How many stigmatized identities can I claim compared with you? This totemic capital is often used to as a means of bolstering one’s credibility or enhancing one’s prospects: People attempt to leverage totemic capital by making claims introduced by phrases like, “As a [insert totemic identification here], I think/feel/desire …,” under the implicit expectation that their personal thoughts, feelings, or desires will be given more weight than they otherwise would in virtue of their affiliation with a historically marginalized or disadvantaged group. Others attempt to exert totemic capital by suggesting that some slight to them personally is actually a slight against their group – tied to the history of oppression, exploitation, or marginalization against “people like them” – or else suggesting that some kind of boon to them personally is actually a great “win” for “people like them” more broadly. Other times, claims are made in the form, “[Insert totemic identification here] people think/feel/want …,” where the assertion of what the people in question desire, believe, and so on is derived not from cited and robust empirical evidence but apparently from some quasi-mystical connection that unites other group members to one another—allowing the claimant’s own thoughts, feelings, preferences, and experiences to be held up as representative of “their people” as a whole (without a need to empirically investigate and substantiate how most others in the group think, feel, or desire with respect to the issue at hand). This also creates an incentive for people to try to claim membership in a group with better totemic capital than the group into which they were born. Rachel Dolezal is perhaps the most infamous case in recent years, but al-Gharbi also describes many more such instances, such as Margaret Seltzer, BethAnn Mclaughlin, Satchuel Cole, Natasha Bannan, Raquel Saraswati, Jessica Krug, Kelly Kean Sharp, Andrea Lee Smith,  CV Vitolo-Haddad, and Tom MacMaster. Summing up these cases, al-Gharbi notes: Across the board, these actors were engaged in social justice–oriented work. In all cases, they could have done the same work as white people—but they recognized that their work would not be received and interpreted the same way were it not for the ruse. It would be unlikely to have the same impact. It would be unlikely to be as well respected. They wanted the moral and epistemic authority that comes with being a totem bearer. And these behaviors are both enabled and incentivized by woke culture: Certain elements of contemporary “victimhood culture” facilitated their ruses: the insistence on accepting identity claims uncritically and nonjudgmentally, the taboo against doubting (let alone demanding evidence for) victimization claims, the more general tendency to place subjective interpretations and experience largely above scrutiny. While intended to serve the genuinely vulnerable, these norms enable – and the rewards of possessing totemic capital create the incentives for – performances like those of Sharp, Vitolo-Haddad, and who knows how many others (there is some evidence that these behaviors may be fairly widespread). Totemic capital also creates a situation where elites in general “consecrate” specific elites of minority backgrounds. As al-Gharbi has discussed, woke elites of minority backgrounds share far more of their worldview with fellow elites than with “normies” of the same identity characteristics. This creates an awkward situation for elites – the poor and vulnerable populations in whose name they claim to act overwhelmingly reject the woke framework and the values of progressive elites. In response to this, elites will insist that the true voices of the struggling communities can be found among their fellow elites, rather than from among the unwashed masses: Insofar as they affirm their preferred narratives about the world, elites from majority groups have a strong interest in “consecrating” elites of other backgrounds as “authentic” voices for “their people.” Elites from historically underrepresented backgrounds have strong material and emotional incentives to understand themselves in this way as well. As a result of this overlap, as we will see, elites from historically marginalized and disadvantaged groups end up playing a pivotal role in legitimizing broader elite attempts to enrich themselves and undermine rivals in the name of social justice. These “consecrated” elites support the values and narratives that are dominant among the (mostly white) progressive elite class: Because the work produced by consecrated voices is often cosmetically radical or subversive—often highly critical of the United States, or various symbolic capitalist institutions, or white people, or men, or cisgender heterosexuals, or socioeconomic elites or liberals—it can be easy to fall under the illusion that consecrated creatives are producing genuinely edgy work or speaking uncomfortable truths to power. In reality, they’re typically producing exactly what their primary audience wants. The more these consecrated elites continue to push this preferred progressive narrative, the more support they gain from the existing elite establishment: The higher they rise, the more mainstream elites aggressively defend them from challenges by dissenters, the more they get softball questions in increasingly fawning interviews and profiles, and the more money they make. They may accumulate a growing list of haters, particularly among those aligned with the Right, but they become largely untouchable nonetheless—at least, so long as they keep telling elites what they want to hear. But this support for intellectuals of minority background is dependent of whether or not those intellectuals are speaking in support of the preferred narrative. But not every intellectual with the proper totemic attributes actually toes this line: Should consecrated minority voices produce content that is genuinely challenging or threatening for mainstream symbolic capitalists—something that is actually unpleasant for them to engage with, something that powerfully calls into question rather than affirming their preferred values and narratives, something that threatens their interests—the offending intellectuals and creatives will often find themselves suddenly facing harsh criticism from the people who used to praise them and, sooner rather than later, widespread neglect from mainstream symbolic capitalists. Frustrated elites generally respond to unacceptable deviance not by rethinking their own positions but by consecrating and subsequently deferring to someone else instead – someone perceived to be more congenial to producing the kind of narratives they want to hear. And there is always some ambitious “diverse” person waiting in the wings to do just that. One such example al-Gharbi describes is the sociologist William Julius Wilson, who pointed out that while the policy measures supported by the woke such as “civil rights laws and affirmative action” had managed to “significantly improve the prospects of upper-middle-class and wealthy Black people, there seemed to be little to no measurable socioeconomic benefit to working-class and poor Blacks.” This finding was not in support of the narrative preferred by the elites, and rather than rethink their position they shunned Wilson in favor of other writers who affirmed their preexisting beliefs. Thus, woke support for the voices of minority intellectuals depends critically on if those intellectuals flatter the political views of the woke: Those who defy symbolic capitalists’ preferences and priorities are deemed unworthy of being taken seriously. Opponents of “Latinx”—including (perhaps especially) if they are Hispanic or Latino—are cast as homophobic, misogynistic, and transphobic and therefore worthy of being “dismissed.” Increasingly, racial and ethnic minorities who reject symbolic capitalists’ preferred narratives on race, or who vote for the “wrong” political candidate, are branded as “multiracially white” or “politically white”—that is, they cease to be minorities at all. As then–Democratic presidential hopeful Joe Biden memorably put it, “If you have a problem figuring out whether you’re voting for me or Trump, then you ain’t black.” When surveys revealed the vast majority of people of Hispanic or Latino background had never even heard of the term “Latinx,” and of those who had, the overwhelming majority hated it, this did not cause woke intellectuals to reevaluate their own use of the term. Instead, a properly concentrated member of the elite arose to reinforce what the woke wanted to hear: In an interview with the New Yorker, one Latinx-identifying symbolic capitalist described detractors of the term as the “weakest link toward true progress, reciprocity and inclusivity.” “For that,” he continued, “you are dismissed. Vamoose. Begone. Get to steppin’. Corran camino. And take your ****** misogynistic, homophobic, and transphobic family members with you.” Another case would be when Out magazine, a long-running gay publication, released an article arguing that while Peter Thiel might sleep with men, he can’t be considered truly gay because he didn’t properly support left wing politics. According to this mindset, being gay wasn’t simply a matter of a person’s private sexual orientation or preferences – it was a full-fledged political project to bring about leftist goals, and anyone who wasn’t on board with this political project therefore failed to be truly gay. However, al-Gharbi also points out that this doesn’t mean such consecrated elites don’t actually believe what they say. He points to the case of Ta-Nehisi Coates, someone whose writings are held in very high regard by woke elites. Still, Coates himself struggled to accept the reception to his work – finding himself bewildered over the fact that the audience most receptive to and in support of his ideas was…rich white people – the very people Coates thought his work would undermine. Unable to make sense of why the message he considered to be subversive was also exactly what wealthy white establishment elites wanted to hear, this “ultimately led Coates to resign from his post at The Atlantic in favor of a faculty position at flagship HBCU Howard University.” Overall, al-Gharbi sums up the dynamics of totemic capital in this way: However, orthogonal to any aspiration to uplift hitherto underappreciated voices and perspectives, sincere though it might have been, these moves were also clearly a gambit by aspiring elites to delegitimize establishment rivals and enhance their own image—efforts sustained through the constant appropriation and policing of others’ “authenticity.” The explicit politics of deference often serve to mask the actual power dynamics at play. Consecrated intellectuals and creatives are not the ones steering the ship—their affluent, highly educated, white, liberal audiences are. And they have never been woke. And neither have we. But this leads us to the big question connecting al-Gharbi’s work together – why is it that the ostensibly woke have never truly been woke, in the sense of attempting to bring about a fairer and more just world? That will be reviewed in the next post. (0 COMMENTS)

It is a bit of a mystery why people who claim to be American-style conservatives do not embrace Friedrich Hayek, the economist and legal theorist who was awarded a Nobel Prize in economics in 1974. The mystery dissipates when one realizes that most self-identified conservatives are in fact as collectivist as the self-defined progressives (“liberals” in the confusing American terminology). Each side gives primacy to collective and political choices over individual and private choices, except that it is different collective choices that each side wants to impose. The difference is typically about which groups in society will be favored and which ones harmed. Let me quote a revealing passage from Hayek’s Law, Legislation, and Liberty (1973–1979; 2021 for the new edition by Jeremy Shearmur), which opposes the common interest of all individuals to each follow his own ends and purposes to an overarching “public interest.”[1] Observe how the quoted passage expresses ideas that are radically opposed to what “the left” and “the right” in the world, Democrats and Republicans in America, believe (to the extent that they believe in anything and, of course, that neither of these two constructed collectives is unanimous). Hayek explains the role of the judge in a free society under the common law (pp. 151–152): The judge, in other words, serves, or tries to maintain and improve, a going order which nobody has designed, an order that has formed itself without the knowledge and often against the will of authority, that extends beyond the range of deliberate organization on the part of anybody, and that is not based on the individuals doing anybody’s will, but on their expectations becoming mutually adjusted. … But although the judge is not committed to upholding a particular status quo, he is committed to upholding the principles on which the existing order is based. His task is indeed one which has meaning only within a spontaneous and abstract order of actions such as the market produces. He must thus be conservative in the sense only that he cannot serve any order that is determined not by rules of individual conduct but by the particular ends of authority. A judge cannot be concerned with the needs of particular persons or groups, or with ‘reasons of state’ or ‘the will of government’, or with any particular purposes which an order of actions may be expected to serve. Within any organization in which the individual actions must be judged by their serviceability to the particular ends at which it aims, there is no room for the judge. In an order like that of socialism in which whatever rules may govern individual actions are not independent of particular results, such rules will not be ‘justiciable’ because they will require a balancing of the particular interests affected in the light of their importance. Socialism is indeed largely a revolt against the impartial justice which considers only the conformity of individual actions to end-independent rules and which is not concerned with the effects of their application in particular instances. Thus a socialist judge would really be a contradiction in terms. … The difficulty many people feel about conceiving of the judge as serving an existing but always imperfect abstract order which is not intended to serve particular interests is resolved when we remember that it is only these abstract features of the order which … can constitute a true common interest of the members of a Great Society, who do not pursue any particular common purposes but merely desire appropriate means for the pursuit of their respective individual purposes. In short, the role of the judge in a free society has nothing to do with the policy interests of the government or with the personal interests of politicians and bureaucrats, and everything to do with the maintenance of a free society where each individual can pursue his own interests limited only by abstract rules banning some means of action (say, murder, aggression, and theft). But note that this logically condemns not only a socialist judge, but any collectivist judge, whether of the left or of the right, that is, any judge pretending to enforce the supremacy of collective choices. It is virtually certain, I believe, that Hayek would have accepted this amendment. Note how radical this part of Hayek’s legal theory is. A judge in a non-collectivist (classical liberal) political regime has no role in defending government policy. He only follows and enforces general rules meeting the long-term agreement of a majority of the population and that apply to both private individuals and government agents (except for the government’s power to levy taxes and some other exceptions that I criticize in my review of the third part of Law, Legislation, and Liberty). A recent court case provides an interesting illustration. The Department of Justice wanted a court to dismiss the case of a policeman found guilty of using excessive force (and on a woman at that!), arguing that the “public interest” is “what the government says is the public interest in this courtroom.” Judge Stephen Wilson, acting like a non-collectivist judge, rejected this argument. From a short review of the decision by Paul Cassell, who argued against the Department of Justice in court (see “The Volokh Conspiracy” in Reason Magazine, August 11, 2025), we may suspect—or hope—that Judge Wilson’s view was not far from Hayek’s distinction between a common interest in the existence of a free society on one hand, and the public interest as whatever the government determine it is on the other hand. These considerations remind us that the “public interest” as an impossible summation of private interests is either an empty or a contradictory concept. [2] It is tempting to propose a reductio ad absurdum in the spirit of Anthony de Jasay: the state is needed to defend the public interest, and the public interest is what the state decides it is. ****************************** [1] I reviewed the whole trilogy for Econlib, and the third article of my review provides hyperlinks to the other two. [2] See my EconLog post, “What in Heaven’s Name Is the Public Interest?” and my Econlib article “The Vacuity of the Political ‘We.’   As an Amazon Associate, Econlib earns from qualifying purchases. A non-collectivist judge, by ChatGPT (0 COMMENTS)

Short version: no. In my recent post on central banks and independence, I cited Harvard economist Jason Furman in discussing how lower central bank rates won’t necessarily translate into lower private borrowing costs: The Federal Reserve only sets a handful of interest rates, and those are limited to rates between banks—the discount rate (the rate at which banks can borrow from the Fed) and the interest rate it pays on bank reserves at the Fed.  The Fed tries to influence the Federal Funds Rate (the rate at which banks borrow from each other) through FOMC operations, but they do not set that rate. The actual rates you and I see are still determined by market factors: risk, inflation, supply, demand, etc.  The Fed cannot set interest rates for mortgages, credit cards, and so on.  It does not have that power.  It tries to influence those rates, yes, but it does not set them. However, the President has argued that reducing rates would reduce Federal borrowing costs, lowering costs for all Americans.  There are two problems with this, one theoretical and one practical. First, the theoretical: US Treasury interest rates are set in the market, not by the Federal Reserve.  Like most prices (and an interest rate is a price), the rate emerges from the intersection of supply and demand.  The rate is not set by the Federal Reserve.  The Federal Reserve tries to influence rates through its monetary policy, but it does not set rates.  If the Federal Reserve lowers its rates but the fundamental supply and demand in the marketplace does not change, neither will Treasury rates.  It’d be like pushing on a rope: no matter how much you push, it’ll just coil in on itself. Indeed, if the market believes the Federal Reserve rate cuts are unjustified, likely causing inflation, the market may demand higher interest rates to compensate for the expected inflation.  Thus, arbitrarily lowering Federal Reserve rates could actually lead to higher borrowing costs for the Federal government. We have seen this behavior in the US before.  For example, in the period 2003–2004, the Federal Reserve target rate was falling/flat, and Treasury interest rates were generally rising.  In the period 2008–2015, the Federal Reserve target rate was flat—close to zero—and Treasury interest rates did their own thing: sometimes rising, sometimes falling, sometimes being flat.  Most recently, Treasuries started to rise in August 2020, a full year and a half before the Federal Reserve started raising rates.  And Treasury rates continued to rise even as the Fed began cutting rates in 2024. Second, the practical: Current projections of the US federal budget and debt indicate that debt will continue to grow if nothing changes.  Consequently, this suggests that the Federal Government will need to issue more Treasuries to fund the debt.  That suggests an increasing supply curve.  If the supply curve increases, all else held equal, the price of a commodity falls.  Since the price of a bond and its interest rate are inverses, the increase in Treasury supply indicates a rising interest rate, thus leading to higher borrowing costs. Ultimately, it is only good economic sense, not wishful thinking, that will lead to lower borrowing costs in the US. (1 COMMENTS)

I began my blogging career at TheMoneyIllusion in early 2009 and ended that blog last year.  In January 2014, I started blogging here at EconLog and have greatly enjoyed the opportunity.  This will be my final post. I wish to thank everyone who works at EconLog, and I wish the best to all of my co-bloggers.  A very special thanks to EconLog editors Lauren Landsburg and Amy Willis, who helped me greatly during my 11 years blogging at EconLog. In today’s post, I’ll provide a few parting thoughts on what I see as the greatest challenge facing America: Almost everything is downstream of integrity Most of us have our worldviews shaped by the era in which we came of age.  For me, it was the Watergate hearings of 1973–74.  I still recall the inspiring bipartisan investigation into that scandal.  Thoughtful and idealistic senators like Howard Baker (R-Tennessee) probed witnesses, asking questions like “What did the President know and when did he know it?” Obviously, that America is long gone.  We now live in a highly polarized country, where even election results are contested.  Politicians are cheerleaders, not statesmen.  Economic statistics are discussed not in terms of their implication for the economy, but rather whether they have been altered to reflect a political agenda.  The media is highly polarized and “news” is often just propaganda.  People speak of “red states” and “blue states”, terms that were never used when I was young. Instead of focusing on specific political issues, I’d like to take a broader view.  As I’ve gotten older, I’ve come to view integrity as the sine qua non of effective public policy.  To see why integrity is important, consider the role played by America’s Constitution.  Most of us view the Constitution as a document that protects individual rights and limits the power of the various branches of government.  In fact, almost every constitutional provision could be easily evaded by a government that lacked integrity.  Laws mean almost nothing unless they are accompanied by informal norms of behavior.  Here are just a few of the many ways in which things might go wrong: The independence of the Supreme Court might be eroded if the court were expanded in size and packed with lots of new judges loyal to the executive. Congress’s power to declare war or impose tariffs could be evaded by an executive that declared a “national emergency”. Term limits on the presidency could be evaded if a spouse or child of the executive were elected, and then effectively turned over power to the termed-out president. (Something similar used to happen with southern governors.) Freedom of speech could be eroded if the government threatened regulatory action against companies or universities that displeased the executive. Subsidies are negative taxes. The withdrawal of a government subsidy is equivalent to the imposition of a tax.  If subsidies are given out to favored industries, then governments can pressure individual firms to do their bidding. The constitutional ban on export taxes could be eroded if the executive demanded that exporters “donate” money to the government in exchange for the privilege of exporting goods. Voting districts might be “gerrymandered” to thwart the will of voters. The “takings clause” in the Constitution might be subverted if courts started ruling that private condominium developments constituted a “public purpose”. Selective prosecution could be used to go after one’s political opponents. Bans on bribery can be easily evaded if people seeking political favors buy goods and services from businesses owned by politicians. In most advanced countries, the government has accumulated a vast amount of fiscal and regulatory power.  It would be nice to assume that the Constitution can protect us from the abuse of that power, but unfortunately, there are too many ways around the restrictions (just as banks can find ways of evading regulations against excessive risk-taking.) In my view, people focus far too much on individual issues and far too little on the essential role of integrity in the political process.  We should demand that politicians tell the truth.  We should demand that politicians refrain from corrupt practices.  We should demand that politicians adhere strictly to not just the letter of the law, but also its intent.  If we need to pay much higher salaries to attract the best people, then we should do so.  History has shown that a lack of integrity in the public realm leads to very bad outcomes in the long run.  In the end, integrity is the only way to prevent a country from becoming a failed state. Some will argue that these views are unrealistic, that we cannot expect politicians to show any integrity.  I disagree.  While perfection is never possible in human affairs, it is obvious that some politicians have more integrity than others.  It’s also clear that some political systems have less corruption than others.  If you suggest that there is no possibility of electing at least somewhat idealistic people, then you are essentially saying that there is no way for America to avoid being a banana republic.  I’m not that pessimistic. If you have enjoyed reading my posts, then please continue following my blogging over at Substack. (2 COMMENTS)

After almost 17 years of blogging at EconLog, I have decided to resign, effective today, and focus more on my Substack. It’s called “I Blog to Differ.” The big advantage of my Substack is that I have total control over subject matter and content. These 17 years, which include my last 9 as an economics professor and my first 8 as a retiree, have been very fulfilling. If I highlighted a lot of the posts I’m particularly proud of, this would turn out to be a long post. So I’ll mention:  A series of 4 posts on monopsony;  A series of 3 posts on Tyler Cowen’s critique of the Great Barrington Declaration; A post on how New York City, despite all the regulation, works as a city; A post in which I advocated allowing contraceptives to be sold over the counter;  A post challenging some wokeness engaged in by the New York Times.   Monopsony In October 2016, economists at Barack Obama’s Council of Economic Advisers published an electronic report in which they argued that there was a lot of monopsony in the U.S. economy. It’s titled, “Labor Market Monopsony: Trends, Consequences, and Policy Responses.” Their claim struck me as odd and so I pored over the report. I found a lot wrong with it, too much to put in one post. So I did a 4-parter. Here’s “The CEA’s Mixed Thinking on Labor Market Monopsony, Part I,” EconLog, October 27, 2016, which gives some background before I proceed to critique the CEA report. Here’s “The CEA’s Mixed Thinking on Labor Market Monopsony, Part II,” EconLog, October 28, 2016, where I lay out some huge weaknesses in the CEA report as well as some fine economic reasoning. Here’s “The CEA’s Mixed Thinking on Labor Market Monopsony, Part III,” EconLog, October 31, 2016. I won’t quote from the above 4 posts. Doing so would make this post way too long. And finally, here’s “The CEA’s Mixed Thinking on Labor Market Monopsony, Part IV,” EconLog, November 5, 2016. By the way, this series led to an interview of me by Ben Casselman of the New York Times. He did this article on January 25, 2018, over a year after I wrote. I reported on the NYT piece here. I didn’t bother pointing it out because it happens so often and I get so tired of pointing it out, but notice that Casselman identified (not completely correctly, by the way) the ideology of the Hoover Institution. Apparently the authors of the NBER report, even Marshall Steinbaum, have no ideology.   Cowen on the Great Barrington Declaration I wrote a number of posts addressing arguably the most important U.S. policy issue from 2020 to 2022: how to deal with Covid. I’ll focus here on my critique of some sloppy thinking by Tyler Cowen. Here’s “Is Cowen Right about the Great Barrington Declaration? Part 1,” EconLog, October 16, 2020. Here’s “Is Cowen Right about the Great Barrington Declaration? Part 2,” EconLog, October 17, 2020. Here’s “Tyler Cowen Doubles Down,” EconLog, October 26, 2020.   Reflections on Life in New York City Here’s “Reflections on Freedom in New York,” EconLog, January 12, 2011. Here are three paragraphs: Because I persuaded United to fly me to San Diego instead of back to Monterey (I would have got back to Monterey too late to catch my flight to San Diego for a Liberty Fund conference), I’m short on clothing. So I bought a nice dress shirt on sale at a store on Fifth Ave. The man behind the counter, who was friendly and helpful, was dark-skinned and had an accent. I asked him if he was from Iran. He is. When he saw that it was just my curiosity at work and not some kind of negative judgment on my part, he warmed up more. When I asked him his name, it sounded complicated, and I spelled it correctly the first time, he was pleased. Why do I tell these stories? Because, when I think of New York city abstractly, I think of a city that doesn’t work. Taxes are high, there are too many crowds, people are pushy and unfriendly, etc. Then, when I actually experience New York, I see how well it works. People are trying to give me what I want, at a fairly low price. The immigrants I run into–and there have been many over the last two days–don’t seem to have come here for welfare but for opportunity to get wealthier. And people are friendly. Why are people friendly? Partly because I love people and I’m friendly to them. But also partly because they are paid to be friendly; they do better by being friendly to customers. As I laid out in The Joy of Freedom: An Economist’s Odyssey, markets create virtue. Part of virtue is simple friendliness and helpfulness.   Let Contraceptives Be Sold Over the Counter In “How to Cut the Cost of Contraceptives by Regulating Less,” EconLog, February 13, 2012, I laid out how women could get contraceptives more quickly and more cheaply if the feds allowed them to sold over the counter. I was one of the first to do so, but in the next few months, several people made the same proposal.   Workplace Challenges Finally, this post, “Workplace Challenges,” EconLog, January 7, 2019, on a New York Times article about a panel at the January 2019 American Economic Association meetings. Notice in the comments how my thoughts upset economist Joshua Gans. Fortunately, commenter RP Long, responding to Gans, understood my point, writing: David presents a very reasonable, empowered, and assertive solution to the problem: Rather than getting caught up in what we privately think people might want and might do, he suggests simply asking people how they want to be treated, and then obliging them. Not only is that reasonable, but it’s also consistent with the recommendation of clinical psychologists: stop worrying about what people might think and just ask them outright (politely, respectfully) what they think.   A Final Note I have enjoyed immensely blogging for Liberty Fund. One of the things that always animated me is the name of the organization that funded me: Liberty Fund. I believe strongly in liberty. That’s different, by the way, from saying that I substituted belief in liberty for good economic reasoning. Writing an average of 24 posts per month helped me develop my ideas and my writing ability (especially my speed at writing.) Lauren Landsburg was very helpful when I was getting my feet wet and Amy Willis has been great to work with. Thanks to Emilio Pacheco for offering me the gig and to former fellow blogger Bryan Caplan for being so welcoming when I began. Thanks also to the literally hundreds of commenters who have added valuable insights or asked good questions.   Remember that if you want to follow my work and thinking, subscribe to my Substack “I Blog to Differ.” (0 COMMENTS)

What can Ernest Hemingway teach us today about the morality of war, the eternal and transient nature of love, and how to write a masterpiece? Listen as author and teacher David Wyatt talks with EconTalk’s Russ Roberts about Hemingway’s epic For Whom the Bell Tolls. Topics include Hemingway’s role in the wars of the 20th century, the book’s context and themes, and its lasting influence on American literature and […] The post Hemingway, Love, and War (with David Wyatt) appeared first on Econlib.

  Are the BLS and Other Government Statistical Agencies Partisan? Here’s What My Research Found by Vincent Geloso, The Daily Economy, August 18, 2025. Excerpt: There is little to substantiate the claim that the BLS produces low-quality data. The BLS (and every other statistical agency) frequently issues preliminary reports from surveys it conducts. As such, revisions are common. How big are those revisions? Pretty small! The graph below (courtesy of my co-author Gary Wagner at the University of Louisiana at Lafayette) shows error rates in monthly payroll employment estimates. It plots the percentage difference between the initial and final estimates. On this graph, a positive value means the initial estimate was lower than the final one. As can be seen, the errors (since 2000) are generally between ±0.5 percent. Most of the time (more than 90 percent), it’s within ±0.25 percent. On a pure absolute benchmark, this is not bad. In fact, if anything, the errors are getting smaller relative to the early period.   Why Collectivism Is Surging by Paul Mueller, Law & Liberty, August 19, 2025. Excerpt: Collectivism also seems to answer many people’s cultural insecurities. On the political left, many wealthy, educated people feel deeply uneasy about their success and blessings, which they label “privilege.” And others, who have not done so well economically and are saddled with five, sometimes six, figure debt from their college years, resent the hand they were dealt and how they have played it. Collective government programs of welfare, redistribution, and rent control look like appealing solutions. The political right has different cultural insecurities. Many worry about declining labor force participation among working-age men, about the opioid crisis, about falling birth rates and falling family formation, about declining manufacturing employment, and about reduced national defense capabilities. They suggest a naïve free trade, free market, and limited government philosophy allowed corporations to wipe out communities and their corresponding civic institutions, especially in middle America.   D.C. Residents Are Right To Protest Unconstitutional Police Roadblocks by C.J. Ciaramella, Reason, August 15, 2025. Excerpt: NBC News and other outlets reported that more than 100 protesters turned out on Wednesday night to heckle federal law enforcement at a checkpoint on 14th Street Northwest and warn drivers of the police ahead. And good for them. Leaving aside the dubious overall legality of the White House’s takeover—the D.C. attorney general filed a lawsuit over that issue Friday—the use of such generalized roadblocks is obnoxious, impinges on Americans’ traditional freedom to travel, and is unconstitutional under the Fourth Amendment’s protections against unreasonable searches and seizures.   Deregulate the Remittance Industry by Jeffrey Miron, Cato at Liberty, August 20, 2025. Excerpts: Remittance regulations force money service providers to act as law enforcement, collecting detailed personal data, performing extensive customer screenings to bar sanctioned individuals, obtaining licenses in both sending and receiving countries, and hiring additional compliance personnel. US financial institutions spent $46 billion in 2022 on compliance. And: Not only does this regulatory regime impose costs on consumers, but it also decreases competition. Due to regulatory requirements, entry into the remittance market is difficult, so the number of operators is small. This often results in a nearly oligopolistic market, including major banks with pricing and markup power.   Georgia Woman Could Lose $30,000 After Local Government Denies Her Permit To Open Hair Salon by Tosin Akintola, Reason, August 21, 2025. Excerpt: When Khalilah Few opened her salon, Creative Crowns Collective, in 2023, she didn’t think her business savvy would put her at odds with the local government. But two years later, she now finds herself in a legal battle with Clayton County, Georgia. After outgrowing her original studio space, Few signed a two-year lease for a new salon housed in an old barbershop in Jonesboro, a city in Clayton County, in March. She invested over $30,000 into the property and applied for a Conditional Use Permit (CUP) in April to open her salon. Despite meeting the legal requirements for a permit [sic: misplaced modifier in original], the Clayton County Zoning Advisory Board and the Board of Commissioners denied Few’s application in July.   Fixing Higher Ed: The Bailey-Caplan Convo by Bryan Caplan, betonit, August 22, 2025. Excerpt: Last month, Michael Bailey interviewed me on higher education, focusing on my most controversial views. Here’s his list of questions: 1. Although I want to focus attention on what in higher education is worth saving, let’s begin by discussing what is wrong. Just this week you cosigned what I believe is an important statement from the Manhattan Institute, “The Manhattan Statement on Higher Education.” Can you tell us more about that statement? Like how did it happen, and what are its main points? 2. The statement pinpointed two recent crises that revealed big problems: the 2020 Summer of George Floyd and the past two years of pro-Palestinian protests. To what extent do you think that universities have declined, and when did this happen?   DRH Note: Bryan Caplan is on fire. He’s at his scintillating best.   Postscript: This is a longer list of highlights than usual. The reason is that it’s the last “highlight reel” I’m doing. I’ll explain in a blog post tomorrow. (0 COMMENTS)

In 1975, New York City’s government ran out of money. “On the simplest level” journalist Martin Mayer wrote, “the story of New York’s financial collapse is the tale of a Ponzi game in municipal paper – the regular and inevitably increasing issuance of notes to be paid off not by the future taxes of revenue certified to be available for that purpose, but by the sale of future notes. Like all chain-letter swindles, Ponzi games self-destruct when the seller runs out of suckers, as New York did in spring 1975.” “And God knows, New York was prodigal,” journalist William Broyles wrote: The balance sheet fairly groans with with the weight of fiscal sins too numerous to detail: ambitious social programs where economy and efficiency were unknown; outrageous contracts with public employees and a gargantuan public payroll; welfare recipients in the Waldorf; irresponsible record-keeping that disguised the city’s financial problems; a less than hospitable attitude toward the apartments and businesses which made up the bulk of the city’s tax rolls.  Others disagreed. “Our true sin, in the eyes of Philistine skinflints and neoconservative ideologues, has been the decency – if not sufficient, still impressive – with which New York has treated its poor” the socialist Irving Howe wrote. “The assault on the city is an assault on maintaining, let alone extending, the welfare state. The assault on the welfare state is an assault on the poor, the deprived, the blacks, the Puerto Ricans.”    This argument persists. In Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, Kim Phillips-Fein writes: …today as in the 1970s, austerity remains a political choice…Beneath the narrow debates about how debts can be paid reverberate larger, as yet unresolved questions about what kind of society we want to have, about who will pay for certain kinds of social provisions and whether we will have them at all. At the end of the day, these are inescapably political questions, not accounting ones. These arguments were absurd when Howe made them in 1976 and were just as absurd when Phillips-Fein made them in 2017.  First, New York’s “austerity” was not “an assault on the poor, the deprived, the blacks, the Puerto Ricans.” To say it was demonstrated “a characteristic form of liberal racism,” Treasury Secretary William E. Simon wrote. “[T]he assumption underlying the rhetoric is always the same: Blacks and Puerto Ricans congregate in New York to go on welfare.” In fact, Simon argued, “[m]embers of racial and ethnic minorities come to New York to work, not to go on welfare. The typical member of a minority group in New York is working at a productive job – and paying exorbitant taxes.”  Indeed, those “tax revenues go to employees’ salaries, pensions, and fringe benefits – all directed to the middle class,” Simon continued. In addition, “the middle class absorbs a significant percentage of the funds allegedly allotted to the poor.” One study “found that some 100,000 middle-class children were receiving welfare;” “…more than one-third of the children attending day-care centers were found to be ineligible;” and “…the free city university system was essentially a gift to the children of the middle class.” New York’s “unpleasant little secret,” Simon concluded, was that the city’s “subsidies to the middle classes have been overwhelmingly greater than its subsidies to the poor.” Something similar is true of social spending more generally, which helps explain why reform is so politically challenging.  Second, whether a government balances its budget is not merely “a political choice.” A government needs money to pay for the goods and services it provides. If it cannot print that money – which New York’s government cannot – if it cannot borrow it – which lenders ceased facilitating in April 1975 – and it cannot tax it – which New York’s government could not do sufficiently as residents and businesses fled the city – then it will have less money to provide those goods and services and will have to provide less of them. Intoning that “another world is possible” does not revoke these fiscal facts of life.  “[H]ad a national government been in place that was willing to accept more responsibility,” Phillips-Fein writes, “the city might not have had to make the kind of cuts it did.” True, the federal government has sources of funding not available to state and city governments, primarily the printing press, but with inflation hitting 11% in 1974, even here there were limits. “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it,” Thomas Sowell wrote. “The first lesson of politics is to disregard the first lesson of economics.” New York’s politicians disregarded the lesson to the city’s cost. Sowell might have noted that academics often disregard it, too.     John Phelan is an Economist at Center of the American Experiment. (0 COMMENTS)

In his 1992 article “Congress is a ‘They,’ not an ‘It’: Legislative Intent as Oxymoron” (International Review of Law and Economics 12 (2)), Harvard University political scientist Kenneth Shepsle opens: An oxymoron is a two-word contradiction.  The claim of this brief paper is that legislative intent, along with military intelligence, jumbo shrimp, and student athlete, belongs in this category. I agree and add that any sort of group behavior (legislative intent, market intent, Supreme Court intent, etc) belong on this list.  In this post, I will focus primarily on economic reasons for methodological individualism, but as the title states, the analysis can (and should) be broadly applied. Methodological individualism is the idea that the dynamics of a group can best be analyzed by looking at the actions of the individuals that make up the group.  Methodological individualism does not deny the existence of groups—of course groups exist.  Indeed, there are times when it makes sense to refer to the group as something that accomplished a goal given the inherent complexities of life. For example, we might say “the firm produced the pencil.”  Yes, many individuals toiling away at various stages worked to make a pencil, but the firm is the framework, or the coordinating mechanism, that brought the pencil into existence.  Applying methodological individualism means that individual behavior is the focus of our analysis.  The constitution of the group emerges out of the behavior of the individuals who make up the group. Furthermore, the relationship is bidirectional.  Individual behavior reflects the constitution of the group, and the constitution of the group influences the behavior of the individual.  As Adam Smith discusses in The Theory of Moral Sentiments, our interactions with one another teach us what behaviours are appropriate and which are not.  We learn conventions, customs, and self-control through our interactions with our peers. Understanding group behavior as the result of interactions among individuals is key to understanding the nature of market behavior.  Some time ago, I discussed the difference between economic theories and accounting identities.  The discussion was mainly focused on technical differences, but methodological individualism, properly understood, leads us to another important distinction: markets do not force people to do anything.  The relationship between economic variables does not represent compulsion.  Behaviors and results are observed and explained, not imposed, by economic theory.  There is no pre-existing equilibrium price, or optimal level of output, that the market desires or moves toward.  Rather, those outcomes emerge from the actions of individuals.  People are not profit-maximizing (which implies that a pre-existing level of profit is known and that individuals act to maximize it), but rather profit-seeking (which indicates people act in pursuit of profit).  In the former description, people are passive.  In the latter, they are active. This is a long way of saying that those who treat economics, markets, or any group behavior as mechanistic fundamentally misunderstand the necessary method of analysis.[1]  Rather, group behavior is organic and emergent.  Methodological individualism helps us see this emergent nature.   — [1] At least in economics, there are other problems with a non-individualist approach to group behavior.  I’d posit that the entire argument relies on an observed contradiction: groups are modeled as rational, but are observed as irrational.  But that is a conversation for another time. (0 COMMENTS)

A few days ago, I listened to Russ Roberts’s EconTalk interview of cardiologist Eric Topol on the health issues involved with aging. For some reason, I’m getting increasingly interested in that issue. An interesting issue comes up at about 36:00 point. Topol states: We should be using better nanoparticles and keeping that mRNA from ever having untoward side effects. But, we haven’t. The companies that make these are stuck in the original version. But, we got about a billion people exposed to them. Later, Russ follows up with this: When you say companies are stuck with their original versions, is that because of the intellectual property protection that they’re relying on and that it’s expensive therefore for them to start from scratch, and therefore they just don’t have an incentive to innovate? Or is there something else going on? Russ is onto something: the expense of starting from scratch. Topol responds: No, I think part of it is the intellectual property. Part of it is they have now had mass production of hundreds of millions of vaccines and to go to a new process–the point being, is: we’ve known that the nanoparticles can be optimized so they even have better penetration. We have these things called self-amplified vaccines where you give much tinier amounts of mRNA. And that’s approved in Japan. But there’s not even a bit of effort to get that going in the United States. That would help reduce the mRNA side effects. So, these companies, they did very well during the pandemic and they got things going quickly. That’s great; but they’re not keeping up with the field. And we’re seeing in other parts of the world the innovations that we need. What Topol doesn’t get into is why there’s progress in Japan that is not being replicated in the United States. The answer is the Food and Drug Administration. Ever since the 1962 change in law, drug companies that want to introduce a drug into the lucrative U.S. market must show not only safety but also efficacy. The requirement for showing efficacy has added almost a decade to the drug development process. So the issue is not intellectual property per se. It’s that the process of getting approval is daunting. That’s why it makes sense, as Dan Klein has argued, for the FDA to automatically approve drugs that have been approved by the FDA’s counterpart in even one of, say, a list of 15 relatively wealthy countries. You might argue that that’s too risky. But if you don’t like the risk, wait until the FDA approves it. Other people can take their chances. That’s what’s so great about freedom. We need more of it. (0 COMMENTS)